What’s Behind Walgreens Deal With Drugstore.com
Last week’s announcement that Walgreens was buying Drugstore.com is being viewed as a savvy move for the drugstore chain. While many financial and retail analysts talk about the knowledge Walgreens will gain as far as how to boost its online presence, many others are quick to note what a coup it is for Walgreens in the race for mass merchants to secure better brands.
“There’s a foot race between CVS and Walgreens,” said one source. “This definitely boosts Walgreens. Everyone wants to be the first to say they have Clinique.” CVS was certainly out of the gate early with its upscale Beauty 360 format, which is serving a need in the market. But, with Drugstore.com and its sister sites SkinStore.com and Beauty.com, Walgreens is also now connected to premium names, such as Origins and Philosophy. Nars and Stila are also staples on the Beauty.com site.
“Our acquisition of Drugstore.com significantly accelerates our online strategy to leverage the best community store network in America by becoming the most convenient choice for health and daily living needs whether customers shop online or in our stores,” said Walgreens president and chief executive officer Greg Wasson. “This acquisition offers a unique opportunity that will provide us immediate access to more than 3 million savvy, online loyal customers, and will allow us to move even closer to our existing customers through relationships with new vendors and partners, adding approximately 60,000 products to our already strong online offering. Importantly, Drugstore.com’s well-recognized presence in the health, personal care, beauty and vision categories, including such strong Web sites as Drugstore.com, Beauty.com, SkinStore.com and VisionDirect.com, will complement and extend many of our own multichannel initiatives that have been driving growth in our business. As a result, we are positioned better than ever to be the most convenient multichannel retailer of health and daily living needs in America — offering customers what they want, when they want it and where they want it.”
From another of its acquisitions, the purchase of Duane Reade, Walgreens is seeing better beauty can boost sales. Duane Reade’s Look Boutiques are attracting consumers and upscale vendors. As a total package, Walgreens now has more ways to reach shoppers migrating from department stores.
Rite Aid formerly had a stake in Drugstore.com, which it sold a few years ago. However, Rite Aid private label products are still sold on Drugstore.com — most think that will soon become Walgreens house brands!
Walgreens was the launching pad of another brand purchased last week — Sinful nail color. Owned by Mirage which also has a budget line called Wild and Crazy and other color cosmetics, has been a line around for several years that really took off after Walgreens gave it significant footage. The fact it surpassed Revlon’s nail color was enough for Revlon to take note and buy up the company. While Revlon wanted to keep the deal quiet, buyers and vendors started hearing about it at CosmoProf. Revlon plans to keep the business run separately, which buyers said would be important so that they simply don’t snip Revlon space to extend Sinful. Word also is that Sinful is ready to expand its production and amp up for further distribution. The color line has been on fire in accounts, such as Walgreens, and hasn’t even expanded yet to CVS and Wal-Mart. “Sinful is on fire,” former Walgreens executive Kathy Steirly who now is a consultant to the beauty business. A buyer who asked not to be named said that although she was happy to see a company like Revlon inject support into Sinful, she hoped it wouldn’t slow down the speed to market the brand has in debuting new colors.
People, Place and Things
A few words with Drugstore.com ceo and chairman Dawn Lepore on the decision to merge with Walgreens:
“We believe the acquisition of Drugstore.com by Walgreens is a great fit for all of our constituencies. Drugstore.com benefits from this transaction by joining the largest and most trusted drugstore chain in the U.S. Our growth strategies are perfectly aligned, and Walgreens will be able to accelerate and expand the investments necessary to achieve our vision and growth opportunities. Our goal consistently has been to create value for our customers, employees and shareholders. We believe we have made significant progress over the last six years and built an organization with a broad and deep bench of Internet experience. The opportunity to become a part of Walgreens is the right next step in this journey.”
What’s In Store
CVS Names Foulkes To New Role: Helena B. Foulkes has been named to the newly created position of executive vice president & chief health care strategy and marketing officer for CVS. In the new role, Foulkes will bring together the company’s capabilities in branding, communications, community relations, charitable giving, health care reform strategy, government relations and marketing into one integrated organization to deliver even better business results and stronger partnerships.
Markwins Elevates Chen: Markwins International appointed Jason Chen as sales manager for Latin America. In this role, he will be responsible for sales in Central America, Caribbean and the Andine countries, namely Colombia, Venezuela, Ecuador and Peru. According to the company, Chen has been an integral part of Markwins International for over seven years, of which the last six were spent in their Shenzhen factory. His responsibilities there included serving as a vital link between Latin America and the production teams.